Sharing my journey through life.

I’m constantly trying to cram too many projects and tasks into my day and it’s not sustainable.

And when I think about it the problem is bigger than just how I schedule my days. It also affects my finances.

For example, if I operate with no margin financially then I create unnecessary stress and pressure in my life. If we have a big unexpected expense and we have no emergency fund then there’s suddenly a major problem in our family.

However, if we have a fully-funded emergency fund (which we define as at least 6 months of living expenses) then the “emergency” gets downgraded from a Category 4 to a Category 1 storm.

It’s the difference between experiencing some “strong winds” life blows versus a storm that feels like it could kill you!

So I’m motivated to build our emergency fund to a full 6 months. For us that means getting it to around $33,600.

This idea of “margin” also applied to business finances. I’ve been self-employed for the last 6 years and my income during this time has been up and down. The typical feast or famine syndrome.

We’ve always “made it” (not sure what “not making it” looks like, I think that means you die!) but there’s never been any “margin” there. I basically pay my expenses and whatever is left is what I pay myself.

That all changed in March of 2017 when I made a decision (which was strongly influenced by my wife) to pay myself a consistent salary every month. I now get paid on the 1st and 15th of the month.

This has been good as it’s created consistent cash flow for personal income. But I realize it’s not enough. I also need margin here too. And recently I read about something called a Core Capital Target while reading Simple Numbers, Straight Talk, Big Profits! by Greg Cabtree.

He defines a Core Capital Target as:two months of operating expenses in cash and nothing drawn on a line of credit.

This is another example of a tangible way to create more margin in your life. So I’m going for it!

The formula, at least for me, looks like this:

Emergency Fund + Core Capital Target = Financial Margin

Financial Margin = More Peace.

And peace is a great thing to have.

So do the math for your situation and ask yourself three questions:

1) How much money do I need to fund 6 month’s of living expenses?
2) How much do I need to fund 2 months of business operating expenses?
3) What am I going to do today to take a step toward realizing these goals?